In an effort to comply with the Homeowner Flood Insurance Affordability Act (AFIAA), FEMA has begun mailing letters to all flood policyholders. The purpose of these letters are to efficiently communicate flood coverage provided to the policyholder. We at Beckerman strongly recommend reading them upon receipt. There are three main points that these letters are trying to convey to policy holders. They are:
What your flood risk is: With the remapping of some areas, policyholders may not be fully aware of what their flood risk is, especially if their flood zone has changed recently. There are a number of flood categories a property could be labeled. This letters will help current policyholders understand what their risk is.
How your policy is rated: One of the main purposes of Flood Insurance Affordability Act (AFIAA) is to reduce, and eventually eliminate the number of flood policies that offer low premiums relative to a property’s flood risk factor. These low premium policies are made up of about 20% of flood policies nationwide. The letter is explaining exactly how and why your policy is rated and what increases the policyholder will see in the coming year. AFIAA has authorized for an increase of 5% to 15% annually of policies that are priced below what the actual risk is.
Elevation Certificates: Another factor that affects flood premium rating is the possession of an elevation certificate. Policies rated without elevation certificates are sometimes, but not always, rated higher. The letters will comment on the possibility of obtaining elevation certificates to assist with flood policy rating. The elevation certificates will cost the property owner to obtain- generally around a couple hundred dollars. The good news is the elevation certificates will not harm you, they will only help.
If you receive a FEMA letter and are having trouble understanding it, there are several ways to find information. You can go to the government flood website or you can give Beckerman and Company a call and we will happily answer any questions you may have.